As Russia struggles to make gains in Ukraine, it will intensify its manoeuvres to stoke inflation in Europe and keep the continent in the dark
By Matthieu Favas: Finance correspondent, The Economistof Russia’s invasion of Ukraine has been a long tunnel for energy users—with no light in sight. Western sanctions and supply cuts from Russia have put pressure on the global oil-and-gas trading system, which was already strained by a sharp rebound in demand after the pandemic and by years of low investment in new production. In theory 2023 could look a little better.
Economic slowdowns will smother oil demand, but disruptions to supply may well keep the petroleum market off balance—the first danger. Once Europe implements its boycott of Russia’s seaborne crude oil, in December, China and India will buy even more than they have in 2022, helping to keep Russia’s barrels in the market. As Europe’s vast imports are re-routed to Asia, new bottlenecks are bound to appear.
Perhaps the wildest card is gas. . Nobody expects it to reopen flows through Nord Stream, its main pipeline to Europe, which is anyway badly damaged after being sabotaged in September. But it could cut supplies through other pipelines that are still delivering gas to Europe, such as the one that runs through Ukraine, and stop deliveringcould strengthen measures aimed at capping the cost of Russian hydrocarbons and otherwise make it more difficult for other countries to buy from its foe.
The next few months will test the West’s resolve. But don’t expect much of a truce in its energy wars with Russia once the winter is over.This article appeared in the Finance section of the print edition of
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